Equity Group records 51% growth in balance sheet despite Covid19 disruption

Equity Group has beaten hard in the past calendar year to post impressive numbers, despite the devastating impact of the Covid19 pandemic across the world.

When releasing the 2020 results, Equity Group Managing Director and CEO Dr James Mwangi said that after the pandemic, the bank was sticking to its corporate goal of “Transforming Lives, Giving dignity and broaden opportunities for wealth creation ”, which guided them through the crisis. .

The bank, he said, implemented a number of interventions which included, removing mobile phone charges of Kshs 1.2 billion to improve disposable household incomes; offering loan hosting possibilities up to 45% of the loan portfolio, to minimize disruption and allow readjustment.

The bank also mobilized and disbursed Kshs 1.7 billion to support community efforts in the fight against the COVID-19 pandemic by purchasing and providing test kits, logistical support and PPE for health workers. frontline health in public health centers managing COVID-19, as well as supporting robust mental health. health and psychosocial wellness program for frontline health workers.

According to Mwangi, the group weathered the disruption of COVID-19 to record 51% growth in its balance sheet with total assets reaching Kshs 1.015 billion from Kshs 674 billion the previous year.

The growth generated by both organic and merger and acquisition strategies has enabled the group to become the first financial institution to cross the trillion shillings rubicon in East and Central Africa.

“Growth was driven by a 53% increase in customer deposits which rose to Kshs 741 billion Kshs 483 billion, while long-term debt financing increased by 71% to Kshs 97 billion Kshs 57 billion with shareholders’ funds increasing by 24% to 139 billion Kshs against 112 billion Kshs, ”he said.

Net interest income increased 23% to Kshs 55 billion from Kshs 45 billion, driven by 30% growth in the customer loan portfolio and 26% growth in investments in government securities. Unfunded income increased by 27% to reach Kshs 38 billion against Kshs 30 billion to contribute to 41% of total income. Forex trading revenues increased 77% to Kshs 6.2 billion from Kshs 3.5 billion. Diaspora remittance fees increased 76% to Kshs 1.5 billion from Kshs 0.9 billion. Forex trading volume increased 51% to Kshs 863 billion from Kshs 571 billion, with diaspora remittances contributing 32% of forex trading volume.

“As part of the Group’s commitment to supporting lives and livelihoods, to keeping the lights of economies on while avoiding massive disruption of economic activities, the Group has granted Kshs 171 billion in loans to clients including repayment capacity has been affected by Covid-19. This represents 32% of the entire gross loan portfolio of Kshs 530 billion. As of December 31, Ksh 40 billion of restructured loans had resumed their repayments and normalized. A thorough examination of all loans granted of Ksh 171 billion revealed doubts about the future viability and quality of the loans of Ksh 9 billion favoring the downgrade of the said impaired loans in NPL (IFRS 9 Stage 3) increasing the NPL portfolio to 11% up from 10.4% as at September 30, 2020, and 9% at the end of the previous year and closing the year with 23% of the accommodated loan portfolio equivalent to 11% of the balance sheet .

Due to the new Covid environment, says Mwangi for the very first time, branches processed less than half of the value of transactions, accounting for only 37.4% of that value, with 62.6% of the value of transactions having held outside the branch.

“The adoption of digital payments has accelerated, with the number of transactions processed through Pay with Equity solutions increasing by 31% and the value of transactions increasing by 58% to reach Ksh2 trillion from Ksh1.3 trillion. “

However, the group’s board of directors did not recommend a dividend for the fiscal year ended December 31, 2020, choosing to cautiously devote the funds generated internally to the group’s successful offensive and defensive strategy, which saw the balance sheet increase by 51% with deposit growth of 53% and loan growth of 30% being capital-weighted items and the expanded operations of a balance sheet of over KSh 1 trillion requiring capital risk weighting.

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